Digitalisation demands digital euro introduction, debate hears

Ljubljana – The Slovenian central bank held a virtual debate on Thursday which heard that, although payments in the eurozone are still mostly done in cash, the increasing digitalisation forces banks to consider introducing the digital euro.

“The goal is to provide citizens with simple access to free and trustworthy means of payment in the digital age,” Banka Slovenije Governor Boštjan Vasle said.

He noted that Eurosystem members had been mulling the possibility of issuing the digital euro as one of possible solutions to support digitalisation of the broader European economy and encourage innovation in the retail payment market for a while.

This project has numerous interesting aspects, Vasle said, including addressing new needs of users and to a certain extent responding to the challenges brought to the payment service market by crypto assets, which are not regulated yet.

The European Central Bank (ECB) issued last autumn a report on the possible introduction of the digital euro, in which it finds that Europeans increasingly opt for digital forms when shopping, saying and investing funds.

“The total number of non-cash payments in the EU last year increased by around 8%,” Vasle said, adding that the Covid-19 pandemic had certainly contributed to this, as many people had changed their payment methods out of infection concerns.

Simon Anko of the payment and settlement systems sector of Banka Slovenije noted that digitalisation was coming inevitably and it might happen that euro cash lost on its importance in the digital future.

He mentioned technological giants such as Facebook, Google and Alibaba, saying that payment services were not their principal activity, but they could secure a major advantage once they add them to their offering.

“Neither of these companies is based in the EU and we don’t want to be strategically dependent on players who are not directly under the EU legislation,” Anko explained.

Both Vasle and Anko stressed that cash needed to remain available to consumers in any way and that the digital euro was not a substitute for cash. “The digital euro will complement cash,” the latter said.

The goal is to get a secure digital form of the currency that would be free of charge in usual circumstances and that would be an alternative to the existing currency at a 1:1 exchange rate.

“The goal is not to establish a new cryptocurrency which could be speculated with or something like that,” Anko added.

Marko Tretnjak of the Slovenian Consumer Association noted that access to physical cash needed to be kept, otherwise certain groups of people who do not use modern technologies for various reasons could have difficulties.

Central bank vice-governor Jožef Bradeško reiterated that the digital euro would be only another means of payment, and that he saw it as an opportunity for banks and payment service providers.

Aleksander Kurtevski of the payment instrument processing company Bankart sees potential in transfers between payment devices, while Blockchain Think Tank Slovenia president Anja Blaj said a gradual transition to cash-free society was needed.

Blaj added that one of the reasons to introduce digital currency was the fact that ATMs in China frequently hand out counterfeit notes. This may be avoided with the digital yuan, which is being developed by the Chinese central bank.